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B U S I N E S S

Satyam Saga
Hope aboard
New Delhi, January 11
Welcoming the government’s move to name new members on Satyam’s board, industry today exuded confidence that the new directors would help shape the future of the scam-hit company and restore the global investors’ confidence in India Inc. “We expect them to show the future path and leverage the experience of 53,000 IT professionals in the company.

Parekh: Restoring employee confidence top priority
Karnik: Continuity  of business main agenda
Achuthan: New  strategies to be chalked out

Acting CEO’s salary also under scanner
New Delhi, January 11
A prime prospect for probe by regulators and authorities investigating the Satyam fraud, acting-CEO Ram Mynampati appears to be the company’s most valued asset. He drew a salary more than that of founder Ramalinga Raju and all the directors put together.

EARLIER STORIES



A woman holds a portrait of her son at a district court after he was recognised as a victim of “karoshi” or death by overwork in Japan. Pushed to their limits, thousands of Japanese are literally working themselves to death each year — a scourge the Asian power has started to address.
A woman holds a portrait of her son at a district court after he was recognised as a victim d to their limits, thousands of Japanese areof “karoshi” or death by overwork in Japan. Pushe literally working themselves to death each year — a scourge the Asian power has started to address. 
— AFP photo

Govt may not take action against
oil PSU managements

New Delhi, January 11
With the restoration of near normalcy in fuel supplies, the government today hinted that it was not considering taking any action against the management of oil PSUs, which for the first time in Indian history saw a three-day strike that almost crippled the economy. As executives of state-run firms held the nation hostage to their demand for higher wages, there were allegations that some chairmen and directors were in league with the striking officers association and instigated them for going on strike.

Market Update 
Quarterly results to determine flow
The sentiment, this week, may remain edgy with investor confidence shattered by a massive over Rs 7,000 crore accounting scam at IT major Satyam Computer Services.

Tax Advice
Reimbursement of tuition fee is taxable
Q. My employer is reimbursing me school fee of my children. Is the amount taxable? — RN Sharma







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Satyam Saga
Hope aboard

New Delhi, January 11
Welcoming the government’s move to name new members on Satyam’s board, industry today exuded confidence that the new directors would help shape the future of the scam-hit company and restore the global investors’ confidence in India Inc.

“We expect them to show the future path and leverage the experience of 53,000 IT professionals in the company. The move will restore confidence of global investors in India Inc,” Ficci secretary general Amit Mitra said.

The government has named eminent banker and HDFC chairman Deepak Parek, IT expert Kiran Karnik and former SEBI member C Achutan to the IT company's board.

CII director general Chandrajeet Banerjee said the people selected for the board were most relevant, experienced and of highest quality.

“They have deep understanding of the corporate governance. I presume that more eminent people will be inducted in the board quickly,” Banerjee said.

Assocham secretray general DS Rawat said the reconstitution of the board and the government taking charge of the troubled company would send right signal.

“The move will save the company from the collapse. It is a confidence building measure not only for the employers and stake holders but the Indian business as a whole,” Rawat said.

Nasscom also welcomed the government’s move to appoint Karnik as a member of the new board.

“He is still an active member of the industry body. He has in depth understanding of the industry. His experience as an industry insider will come in handy,” Nasscom chairman Ganesh Natarajan said. — PTI

Parekh: Restoring employee confidence top priority

HDFC Bank chairman Deepak Parekh today said the board's top most priority would be to restore confidence of the company's employees and clients.

“We need to meet as soon as possible and clear the mess,” Parekh told reporters here.

“I have not met the other board members yet but will soon meet and assess the magnitude of the issue. Then we have to work on the re-statement of accounts,” Parekh added.

The Centre had dissolved the Satyam’s board on Friday last shortly after the firm’s founder B Ramalinga Raju and his brother B Rama Raju were arrested on charges of criminal conspiracy, breach of trust, forgery and fraudulent cancellation of securities.

Karnik: Continuity of business main agenda

Kiran Karnik, who has been appointed as the one of three members in the newly constituted board of Satyam Computers, today said ensuring business continuity of the IT major would be the board's first priority.

“The first priority of the board will be to ensure business continuity. We also have to make sure that India continues to be a safe, secure and reliable destination for IT," former president of Nasscom Kiran Karnik said.

Talking about the appointment of seven other members to the board, he said: “It’s too early to comment on this. We will have to consult with the government for that. As of now I have not received any communication from the government in this regard."

Karnik also said the three newly named board members would meet as soon as possible and that the first priority is the arrangement of an operational management.

Karnik was the managing director at Discovery Networks in India from 1995-2001. He spearheaded the launch of Discovery Channel in South Asia in August 1995 and Animal Planet in 1999. Karnik has also worked for over 20 years with the Indian Space Research Organisation.

Achuthan: New strategies to be chalked out

Newly appointed Satyam board member C Achuthan today said the topmost priority of the team would be to put back on rail the scam-tainted IT company and ensure that all those guilty do not go scot-free.

“The first step in the board meeting would be to evolve the strategy on how to go ahead and restore the damaged image of the company,” Achuthan, former SEBI member, said here.

The board would also ensure that those behind the “calamity” would not go scot-free and that similar instances do not recur, Achuthan said. — Agencies

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Acting CEO’s salary also under scanner

New Delhi, January 11
A prime prospect for probe by regulators and authorities investigating the Satyam fraud, acting-CEO Ram Mynampati appears to be the company’s most valued asset. He drew a salary more than that of founder Ramalinga Raju and all the directors put together.

At the same time, its independent directors, many of whom have quit Satyam board after the Maytas fiasco on December 16, got at least Rs 1 lakh a month as commission and sitting fees.

Mynampati, who is now being questioned by the team of market regulator SEBI, got a total package of over Rs 3.5 crore during the year ended March 2008, while founder and chairman had to contend with just about one fifth.

A perusal of company documents reveals all the directors, except Mynampati, got a total of Rs 2.6 crore as salary, commissions, sitting fees, professional fees and other receivables.

What is surprising is the difference between the package of Mynampati and all the others put together is about Rs 1 crore, almost the same that the second best package that was given to independent Satyam director Krisha G Palepu. — PTI

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Govt may not take action against oil
PSU
managements

New Delhi, January 11
With the restoration of near normalcy in fuel supplies, the government today hinted that it was not considering taking any action against the management of oil PSUs, which for the first time in Indian history saw a three-day strike that almost crippled the economy.

As executives of state-run firms held the nation hostage to their demand for higher wages, there were allegations that some chairmen and directors were in league with the striking officers association and instigated them for going on strike.

Petroleum secretary RS Pandey, however, said he was not aware of any enquiry or action being initiated on the allegations.

“Everyone has undergone a great deal of trauma, we have had a tough experience. I don't think you all should start finding fault (with anyone). It is the time to look ahead to the future,” he told reporters here.

No concrete proof emerged on the allegations and in fact Oil and Natural Gas Corp chairman and managing director RS Sharma personally camped in Hazira in Gujarat to break the strike in his company that had halted natural gas production from the nation's largest fields.

IndianOil Corp chairman Sarthak Behuria did some tough talking, including threat of sending striking officers to jail, to break the strike that saw two-third of its 18,000 pumps running dry and later acted quickly to restore normalcy.

Similarly, GAIL chairman and managing director UD Choubey flew to Gujarat to break the strike and then oversaw restart of the nation's main Hazira-Vijaipur-Jagdishpur trunk pipeline, restoring fuel supplies to power and fertiliser plants. — PTI 

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Market Update 
Quarterly results to determine flow
by Lalit Batra

The sentiment, this week, may remain edgy with investor confidence shattered by a massive over Rs 7,000 crore accounting scam at IT major Satyam Computer Services.

The arrest of Ramalinga Raju, ex-chairman of Satyam, marked the end of a distressing week (last) for Indian stock markets. The Satyam scandal wore heavy on the markets during the latter part of the holiday-shortened week. Key indices edged lower — the Sensex lost 5.5 per cent, whereas the Nifty lost 5.7 per cent to close the last week at 9,406 and 2,873, respectively.

Going forward, the sentiment would be dictated by the third quarter results, which the market expects to be poor on high input costs, credit crunch and high interest rates, coupled with the burden of piled-up inventories. Infosys, HDFC Bank, Bajaj Auto and Power Finance Corporation will unveil their December 2008 quarterly results in the week.

Inflation has been on a sustained fall since peaking at a 16-year high of 12.91 per cent raising hopes of further softening of interest rates from the Reserve Bank of India. Wholesale price index (WPI)-based inflation rate fell to a 10-month low of 5.91 per cent in the week ended December 27, 2008, from 6.38 per cent in the previous week.

Satyam 5Computer Services

The crash in the stock price of Satyam Computers last week from Rs 178 to Rs 23 has certain set of investors wondering whether the stock is now a good bet or not. Given the fact that there is almost no clarity regarding the company’s future, we would advise the investors to stay away from the stock till a clearer picture emerges.

Satyam came into limelight for its poor corporate governance in mid-December 2008, when the management announced its decision to buy Maytas Infra and Maytas Properties — the two companies owned by the chairman’s sons, using Satyam’s cash. The company had to take back this decision within 12 hours after getting the thumbs down from investors. Since then, bad news about the company is unearthing almost everyday.

Post the Maytas fiasco, the World Bank came up with its disclosure that the company had tried to bribe its officials and failed to maintain documentation to support fees charged for its sub-contractors. It may be noted that Satyam is also facing charges from its erstwhile client, Upaid, pertaining to forgery and fraud.

The ghastly disclosure made by Raju has completely shaken our belief in the company. The recent events have tarnished the reputation of company and have exposed the malicious intentions of the promoter and management. The company is not only facing issues related to poor corporate governance but also have serious issues of forgery and breach of trust. Moreover, it is also not clear about the assets that the company holds given the disclosure by the company’s ex-chairman.

Given the above facts, investors may stay away from the stock at least for
the time being.

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Tax Advice
Reimbursement of tuition fee is taxable
by S.C. Vasudeva

Q. My employer is reimbursing me school fee of my children. Is the amount taxable? — RN Sharma

A. Reimbursement of expenditure incurred for the education of the family members of the employee is taxable as a perquisite in all cases. Any such reimbursement of tuition fees is, therefore, taxable.

Domestic servant allowance

Q. I am entitled to two servants who are provided by my employer. Will this be taken as a perquisite and if so will such a perquisite be taxable and how the value, thereof, would be computed? — SP Serma

A. According to the rules in connection with the valuation of perquisite, the value of benefit to the employee (or any member of his household) resulting from the provision by the employer of services of a sweeper, a gardener, a watchman or a personal attendant, shall be the actual cost to the employer.

The actual cost in such a case shall be the total amount of salary paid or payable by the employer (or any other person on his behalf) for such services as reduced by any amount paid by the employee for such services.

If a domestic servant is engaged by the employee and salary is paid/reimbursed by the employer, the perquisite is taxable in the hands of the employees. Domestic servant allowance given to an employee is also chargeable to tax. It is taxable even if the allowance is used for engaging a domestic servant.

Non-deduction of TDS

Q. I am a senior citizen aged 68 years. Presently, my total taxable income that is mostly from bank and post office interest is below the exemption limit of Rs 2,25,000 without availing deductions like PPF under Section 80C.

I am filing my return regularly though my tax liability is nil for the past some years.

I am submitting Form 15H with the bank for non-deduction of TDS.

i) Is it essential to continue filing return based on above details?

ii) In case my total taxable income goes above the prevailing exemption limit (which is presently Rs 2,25,000) and this is brought down to say Rs 1,80,000 by way of investment in PPF and NSC under Section 80C:

(a) Can I still submit Form 15H to the bank for no TDS?

(b) Am I required to file return in this case? — SP Gambhir, Karnal

A. The reply to your queries is as under:

1. In your case your total income goes above the provision of exemption limit and is brought down by claiming deduction under Section 80C, you will be liable to file the tax return in view of the amendment to the provisions of Section 139.

2. You can continue to file Form 15H to the bank for non-deduction of tax at source.

Term deposits

Q. Please refer to your clarification made in the Tribune dated December 29 in connection with bank term deposits for five years under Section 80C where in the case of the nominee of the assessee, principal amount shall not be included in his total income. Term deposits can be placed as a single or joint account but in the case of a joint account deduction under Section 80C is available only to the first holder of the deposit. Once the first holder - the assessee - has expired, can the joint holder withdraw the deposit prematurely like a nominee and enjoy the privilege as above?

A similar anomaly exists in post office NSE 8th issue. Is there any provision for the joint holder to encash NSE prematurely availing the above benefits on the death of the first holder - the assessee? — VN Bhatia

A. The proviso to Sub-section 6A of Section 80C of the Act provides that the pre-mature withdrawal of term deposit that would not be liable to tax shall not include any amount received by the nominee or the legal heir of the assessee on the death of such assessee other than interest, if any, accrued thereon, which was not included in the total income of the assessee for the previous year or years preceding such previous year. A literal interpretation of the above proviso would mean that the legal heir if he is a joint holder with the deceased would be entitled to the aforesaid facility and if the joint holder is not a legal heir, the facility of pre-mature withdrawal may not be available.

The pre-mature encashment of national saving certificates VIII issue is permissible under Rule 16 of the national saving certificate (VIII issue) Rules 1999 on the death of the holder or any of the holders in case of joint holders. The payment of interest on such national saving certificates is provided in various sub-rules depending upon the period upto, which such pre-mature encashment is made. 

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